Gold prices fall from record high on profit booking after Fed rate cut

Gold prices retreated from record highs on Thursday as investors booked some profit after the U.S. Federal Reserve’s rate cut and policy update. Gold futures swung between gains and losses, after reaching a record high on Wednesday, as market participants digested comments from Fed Chair Jerome Powell.

Spot gold was up 0.2% at $ 3,666.80 per ounce, at the time of reporting, after hitting a record high of $3,707.40 in the previous session. The price moved in a narrow range of $3,634.19-$3,671.97 during the session so far.

In the overnight development, the U.S. Federal Reserve shifted toward monetary easing in September 2025 by cutting its benchmark interest rate 25 basis points (bps) to 4.%-4.25%, its first reduction since December 2024. In an 11-to-1 vote, officials approved the the policy easing move, while Governor Stephen Miran advocated for a larger 50 bps reduction.

The U.S. central bank also signalled a dovish stance, indicating the possibility of two additional quarter-point rate cuts later this year. The Fed Chair Jerome Powell highlighted the central bank’s dual mandate of achieving maximum employment and maintaining price stability, describing the current environment as an “unusual situation” with competing risks.

Gold prices have risen over 10% in the past one month, while it has delivered year-to-date (YTD) return of over 42%, driven by weaker U.S. dollar, elevated geopolitical tensions, and strong inflows into global gold ETFs.

Gold futures slip over 0.5% on MCX

In the domestic market, gold prices fell over 0.5% on the Multi Commodity Exchange (MCX). October futures slipped 0.56% to ₹1,09,210 per 10 grams, while the December contract was down 0.51% at ₹1,10,300. In Delhi, 24-carat gold was priced at ₹1,11,873 per 10 grams.

"Gold opened weak as participants booked profits ahead of the Fed’s policy decision, but soon recovered with support from rupee weakness, lifting MCX Gold to ₹1,09,775 from lows of ₹1,08,700. Comex Gold also rebounded from $3,633 to $3,670, aiding the recovery,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

He said that volatility is expected to remain high, with profit booking at higher levels and strong buying support on dips. Gold range is seen between ₹1,07,500–₹1,11,000.

According to Axis Securities, the Fed delivered its first 25-basis-point rate cut of 2025, as expected. However, its outlook for 2026 was less dovish, with markets now factoring in only one possible cut next year.

“This shift in expectations weighed on bullion, which had surged in recent weeks on hopes of deeper cuts and rising geopolitical tensions,” it said.

As per World Gold Council report, Gold prices in India have largely tracked global trends, with a weaker rupee (down 3% year-to-date) amplifying domestic gains. By mid-September, prices had climbed 7% for the month to ₹1,06,863 per 10 grams, taking the year-to-date rise to 44%. Importantly, demand revival has helped shrink domestic price discounts, which even turned into small premiums in late August and again in mid-September.

“Notably, signs of demand interest have helped narrow domestic price discounts, which briefly flipped to a marginal premium in late August and again in mid-September. This marks a noteworthy change, as domestic gold prices had been trading at a near-sustained discount since December,” said Kavita Chacko, Research Head, India, World Gold Council.

India’s gold ETFs recorded strong inflows in August, marking the fourth straight month of gains. Net inflows rose 74% month-on-month to ₹2,190 crore ($250 million), the second-highest this year after January and broadly in line with earlier estimates.

Chacko said that gold demand in India is showing signs of a pickup with the onset of the festive season, led primarily by a surge in physical investment demand for bars and coins, citing market reports and anecdotal evidence from trade channels. Investment interest is reportedly outpacing jewellery purchases, as consumers are drawn in by the renewed uptrend in prices and expectations of further increases, she added.

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